Canada’s Biggest Active Equity Bets in 2025: Hits and Misses

Active Canadian equity managers posted strong absolute results in 2025. The median fund returned 25.5%, marking the third straight year of double‑digit gains. But those results lagged the broader market. The Morningstar Canada Index rose 32.3%, leaving the typical manager trailing by about 7 percentage points—one of the widest gaps in decades.

To understand what caused the shortfall, we reviewed the holdings of over 119 active Canadian equity funds in Morningstar Direct. We identified their largest active positions—where they collectively owned more or less of a stock relative to the Canada Index—and analyzed whether each position detracted from or added to their benchmark-relative returns.

Funds were underweight Canada Index holdings in aggregate, with an average of 8.2% in cash or out-of-benchmark securities.

The Hits: Where Active Bets Helped

• Enbridge: Funds were meaningfully underweight pipeline operator Enbridge, which returned 13.8% but still trailed the broader market’s 30%‑plus gain.
• Canadian Pacific Kansas City: An underweight to the railroad giant added value as the railway’s shares fell on softer macro conditions and earnings downgrades.
• Quebecor: A collective overweight in Quebecor paid off. The stock returned 68.6% in 2025, supported by strong wireless subscriber growth and expansion of its national footprint.

The Misses: The Positions That Hurt

• Gold stocks: With gold prices surging, gold companies made a record contribution to index returns. Underweights in Barrick Mining and Wheaton Precious Metals dragged on performance. But it wasn’t just the large miners that hurt; some of the largest detractors last year were smaller companies that doubled or tripled in price.
• Shopify: Shopify was the largest underweight (a 2.6% detractor on average). Its 44.3% gain in 2025 made low exposure one of the biggest drags on relative returns.
• CGI: Managers’ overweight in CGI hurt results. The IT services firm fell nearly 20% on weaker sentiment toward consulting and outsourcing names.
• Big‑bank underweights: Managers were underweight several major banks—TD, RBC, Scotiabank, CIBC, and BMO—and all beat the index. TD led the group with a 74.5% return, making these collective underweights a notable headwind.

The Bets That Didn’t Move the Needle

Some positions had little impact on relative performance because they combined small positions with satisfactory returns. TMX Group was funds’ largest overweight at 0.9 percentage points more than the benchmark, but its modest index weight meant its 19.9% gain (below the benchmark’s overall return) made only a negligible difference to results.

Early 2026: One Big Swing Already Reversing

There are early signs that 2026 may offer a more supportive backdrop for active managers. Shopify—2025’s biggest active underweight—is down over 30% this year as of early February. Gold markets have also become more volatile, with sharp moves in both directions to start the year.